Australia has unveiled its biggest ever investments in the nation's peacetime defence capabilities in the face of a mounting military presence on its doorstep and numerous global security threats.

Prime Minister Malcolm Turnbull cited increased defence spending around the region and potential flashpoints in the South China Sea and the Korean peninsula as the most challenging strategic environment 'we have faced in peacetime'.

Australia will spend $195 billion over the next decade in an exponential expansion of its naval, air force and military might- along with a huge boost to its spying and surveillance forces.

'These are momentous times. The stakes are high. And as the opportunities expand, so does the cost of losing them,' Mr Turnbull said in launching a new Defence White Paper in Canberra on Thursday.

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Australia has announced it would spend $195 billion over the next decade, including buying three additional destroyers, nine new frigates and 12 offshore patrol boats

Joint Strike Fighters, also known as 72 F-35s, will be added to the air defence forces amid the sweeping new expansion of Australia's defences

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Some 2,500 new military roles will be created to expand the total defence force to 62,400 personnel, with 900 jobs focused on improved cyber, intelligence and space security.

The cash injection would take Australia's defence spending to two percent of GDP by 2020-21, three years earlier than previously outlined, Turnbull said. The 2016-17 defence budget is $32.4 billion, with the additional investment boosting the annual funding to $58.7 billion in 2025-26.

The announcement comes with Australia's close ally the United States pursuing a foreign policy 'pivot' towards Asia, while Beijing flexes its muscles in the region through a military build-up in the contested South China Sea.

At the same time, tensions are high on the Korean peninsula after North Korea's January nuclear test and a rocket launch this month.

Australia will be a doubling its submarine fleet to 24 amid soaring tensions in the the South China Sea and the Korean peninsula

Prime Minister Malcolm Turnbull (C) speaks to Army Cadets after the launch of the 2016 Defence White Paper at the Australian Defence Force Academy in Canberra on February

Mr Turnbull said that in the next two decades, there would be increased military capabilities in the Indo-Pacific region, including 'half the world's submarines and half the world's combat aircraft'.

'We would be concerned if the competition for influence and the growth in military capability were to lead to instability and threaten Australia's interests, whether in the South China Sea, the Korean peninsula or further afield,' he added.

'We have a strong, vital, vested interest in the maintenance of peace, stability and respect for the rule of law. The decisions we take now will impact on our defence capability and outlook for decades to come.'

At a regular press briefing Thursday, Chinese foreign ministry spokeswoman Hua Chunying said that China was 'dissatisfied' with statements it found 'negative' in the white paper about its South China Sea policy.

'In the hopes of relieving tensions and the possibility of arms race, we hope that relevant countries can give up joint drills and stop increasing their military presence in the region,' she said.

Some 2,500 new military roles will be created to expand the total defence force to 62,400 personnel, with 900 jobs focused on improved cyber, intelligence and space security

John Blaxland, a military expert at the Australian National University's Strategic and Defence Studies Centre, said Canberra's boost was consistent with other nations, adding that the global average for defence spending was between 2.1-2.3 percent of GDP.

'In a world where the clouds are getting darker and where power dynamics are shifting and that shifting is creating rub points that could turn into spark points, the insurance policy which is the... Australian Defence Force is becoming less politically contentious,' Blaxland told AFP.

Three international bidders -- DCNS of France, Germany's TKMS and the Japanese government -- are competing for a submarine project worth some$50 billion to replace Australia's current diesel and electric-powered Collins Class submarines.

A decision on the winner is due this year.

Australia is part of the US-led campaign against the Islamic State group in Iraq, contributing military jets and special forces. It also started carrying out air strikes against IS targets in Syria last year.

'These are momentous times. The stakes are high. And as the opportunities expand, so does the cost of losing them,' Mr Turnbull said in launching a new Defence White Paper in Canberra on Thursday

Mr Turnbull (R) said the government was committed to combating the most challenging strategic environment 'we have faced in peacetime'